If anyone has tried to change account details for their telephone, electricity, Foxtel or any other common service provider on behalf of a friend or relative, you will have experienced the icy response of “I’m sorry we cannot discuss that account with you because of privacy laws”.
We have all had this situation occur, even when it is an electricity account that you have had as a couple for more than 20 years. We had a recent example where a couple had lived at the same address for 30 years with the same electricity provider and when the husband had a stroke and went into care, the electricity company refused to deal with his wife of 30 years purely because the electricity account had been taken out in his name prior to them being married.
You can imagine the ongoing problems that family members face when their parent, spouse or child is unable to conduct their own affairs due to loss of capacity caused by illness or injury. It is a very frustrating experience and usually in the middle of the stress and anxiety of having to deal with the sudden onset of illness or injury to your family member.
Whilst it is also wise to have your Will in place to cover the ultimate contingency of death, in these times of modern medicine and accessible medical treatment, it is more likely that, statistically, you will survive a significant illness or injury but the downside of this is that you could be left with a lack of full mental capacity (or loss of speech and/or use of your limbs etc.). It is therefore probably more appropriate to hold an Enduring Power of Attorney so that your appointed attorneys can manage your financial and health affairs in the event that you are unable to attend to these matters yourself.
What is an Enduring Power of Attorney? Many people confuse a Power of Attorney with being an executor in a Will. A Power of Attorney is a document that appoints someone or more than one person to basically sign any documents and attend to any financial or legal matters on your behalf as if they were you. Although you can impose any restrictions and/or conditions in relation to the Power of Attorney, the most common form of Enduring Power of Attorney that people sign is basically an unlimited attorney which has immediate effect. This means that as soon as you sign an Enduring Power of Attorney in favour of someone, they could basically walk straight down to the bank and withdraw all of your funds from your accounts!
Some Powers of Attorney do not come into effect until such time as the person making the Power of Attorney has lost mental capacity (to be certified by a medical practitioner). This can cause problems due to disputes concerning whether the person has in fact lost mental capacity to satisfy the precondition of the Enduring Power of Attorney coming into effect. Most people who suffer from Alzheimers or dementia do not realise that they are losing their capacity and can be very stubborn in relation to agreeing that someone else should attend to the handling of their financial affairs and/or their medical treatment and living conditions (e.g. putting someone into a nursing home or a care facility).
Many people think that it is an easy exercise to download the appropriate Government form from the website, fill it out and attend upon a Justice of the Peace in a shopping centre in order to sign the document. This is a dangerous exercise and is similar to filling out a do it yourself Will kit. Many people do not realise the true power of an Enduring Power of Attorney and the dangers that can flow from appointing one person to be immediately in charge of all of their financial affairs. Unfortunately we have many cases of sole attorneys being appointed who are trusted family members and who subsequently abuse that trust and use the funds for their own purposes.
Anyone considering completing an Enduring Power of Attorney should carefully consider who they are going to appoint as their attorneys and take the following into consideration:-
- Be careful about who you appoint as your attorneys. It is unwise to appoint one person to be the sole person in charge of your affairs. It is better to appoint joint attorneys and ensure that they must operate together. Try not to appoint two people who might collude or work together to defraud your assets. Try to make sure that you have two independent people who can keep an eye on each other;
- Make sure that you make provision for reserve attorneys to be appointed in the event that your appointed attorneys either die before you, lose capacity themselves or are unable to fulfil their duties as an attorney (e.g. if they are unable to be found, are bankrupt or in jail);
- Make sure that you carefully consider the terms and conditions of the Enduring Power of Attorney. For example, you may wish to ensure that it does not come into operation until after you have lost capacity. You should also make sure that you make provision for any special circumstances that exist (e.g. making provision for certain family members and/or gifts to children etc.);
- You should carefully consider the dynamics of your family and the attorneys that you are appointing. It is no use appointing a brother and sister as joint attorneys if they do not get on with each other and will argue over decision making issues. By the same token, try not to leave out relatives from your appointed attorneys. If you have 3 children it is wise to appoint the 3 of them jointly or at least a majority of 2 out of the 3 in order to keep the peace amongst your family members. If there are irreconcilable differences amongst your preferred family members, you should consider appointing independent professionals as your attorneys;
- Appoint someone who has the time and is smart enough to handle your affairs. It’s no use appointing someone who is unfamiliar with business matters as an attorney or someone who is not very good with paperwork and dealing with authorities and companies. The role as an attorney can be very time consuming and demanding – make sure your chosen attorneys are up to the job at hand;
- Many people who do not have relatives they can trust appoint their lawyers and/or their accountants to handle their affairs in the event that they lose capacity. There will be legal and accounting fees associated with this exercise but sometimes this is preferable than having someone misappropriating your funds or not looking after your affairs properly. At least professionals have compulsory indemnity insurance, fidelity cover for their trust account, and are regularly audited by authorities.
These are just some of the issues that you need to take into account when you are thinking of making a valid and appropriate Enduring Power of Attorney. You should seek proper legal advice in relation to the terms and conditions of the Enduring Power of Attorney and carefully take into account your overall family situation and your assets. You should also be careful to take into account any companies, trusts or business entities that you control as any loss of capacity will also affect your ability to continue with these entities.
Please note that in Queensland an Enduring Power of Attorney has the financial and health matters contained in the one document. In New South Wales, there are different laws applicable and there are separate documents for financial and property matters (Enduring Power of Attorney) and an Enduring Guardian for health and lifestyle issues. It is advisable to ensure that you are covered in relation to these issues, no matter what your age or circumstances are. Your circumstances can change literally in a heartbeat and the consequences of not having an Enduring Power of Attorney in place are that your family members could be put to the cost and stress of applying to QCAT or NCAT for Orders that they be appointed as the attorney and/or financial manager of the person who has lost mental capacity. These applications take precious time and are not always granted in favour of the person applying for the Orders. Once again, you do not want to be in a position of having to make formal applications to a Tribunal in circumstances where your beloved family member is in urgent need of assistance.
For any enquiries concerning Enduring Powers of Attorney please contact our Wills and Estates Department Manager Donna Tolley on direct line 07 5506 8241, email email@example.com or freecall 1800 621 071.